An Investment in Capability

On the same subject

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  March 29, 2019 | Local, Naval

  SNC-Lavalin's legal woes are putting a $500M federal defence contract at risk

  Murray Brewster · CBC News A SNC-Lavalin contract with the Department of National Defence (DND) worth half a billion dollars comes up for renewal next year — when the Montreal-based engineering giant is expected to be on trial over corruption charges. The pending expiry of the $507 million contract to support the servicing of minor warships and auxiliary vessels, signed in 2011, sharpens the debate over what a guilty verdict would mean for the Quebec-based engineering giant and whether a conviction actually would mean subjecting the company to a 10-year ban on bidding for federal contracts. The stakes are high for DND. In addition to holding an important defence contract, SNC-Lavalin has access to a range of secret military drawings, equipment and intellectual property. Although its agreements are periodically reopened to new bids, the embattled corporation has been a reliable contractor for National Defence. A survey of active federal government contracts shows DND and Public Services and Procurement Canada (PSPC) were the two biggest users of SNC-Lavalin services and construction during the current fiscal year. Across the whole of the federal government, SNC-Lavalin holds 53 'active' federal government contracts — 25 of them with DND — with a combined value of $670 million. A company with a big federal footprint The firm signed roughly $68 million in new or renewed agreements with the federal government ($23.7 million with DND and PSPC alone) in the current budget year up to the end of December. That figure excludes what could be a large number of smaller contracts worth less than $25,000 — contracts the federal government can award without competition. An inventory of those agreements is extremely difficult to track down, but PSPC acknowledged it awarded $146,522 in minor work to SNC-Lavalin in the current fiscal year. The RCMP laid corruption charges against SNC-Lavalin and some of its units in February 2015. All the charges relate to the company's operations in Libya. The charges allege that the company offered officials in that country $47 million in bribes and accuse SNC-Lavalin and two of its subsidiaries of defrauding various Libyan public agencies of approximately $129.8 million over 10 years, starting in 2001. The company has been at the centre of a political firestorm since early February, when The Globe and Mail reported that former justice minister Jody Wilson-Raybould felt pressured by the Prime Minister's Office to grant the company a deferred prosecution agreement (DPA) — a legal tool which would have allowed the company to avoid a criminal trial by acknowledging fault and paying a fine, among other conditions. In defending their interest in a DPA for SNC-Lavalin, Prime Minister Justin Trudeau and others in his government have pointed to the scale of the engineering firm's business, the possibility it could be banned from federal government work and the number of people it employs. Scott Newark, a former Crown prosecutor who teaches at Simon Fraser University, said it's been clear from the outset that avoiding the federal contract ban has been SNC-Lavalin's main objective. The question of what would happen to those federal contracts should the company be convicted is a subject of debate, however. There are policy provisions that allow federal officials to cancel existing contracts and ban future bids from a company convicted of serious crimes, such as bribery. PSPC would only say the federal government would "assess the situation" if "a supplier becomes ineligible during the life of a contract" due to a conviction. The power to terminate or suspend a contract rests with federal bureaucrats, according to PSPC's Ineligibility and Suspension Policy. A company convicted of serious crimes can avoid being fired by the feds by signing an undertaking stating "that it will conduct business with Canada in an ethical and responsible manner." But there's never a guarantee that such an undertaking will be offered to a convicted company. Just three companies are currently banned from carrying on business with the federal government — all relatively small firms in Ontario, Quebec and Newfoundland. No ban on bidding during trial A spokesman for DND said there's nothing stopping SNC-Lavalin from continuing to bid on federal contracts as they appear, even during its trial. "These contracts were issued pursuant to Government of Canada contracting regulations, particularly as it concerns open, fair and transparent competitions," said Dan Le Bouthillier in an email. "Those regulations also stipulate that any company eligible to bid on Government of Canada contracts may continue to do so, so long as they meet the necessary requirements for the work." In an analysis piece for the Macdonald-Laurier Institute, Newark said PSPC is working on a revision of its 'integrity regime' policy to give federal officials more discretion to waive bans of individual companies contracting with the federal government. Public Services Minister Carla Qualtrough has said her department is looking at eliminating fixed bidding disqualification periods and replacing them with a wholly discretionary determination — which would include the option of imposing no contracting ban at all. Even under the current system, Newark said, an order cancelling a company's federal contracts and banning it from future contracts following a conviction is far from a slam-dunk. "I checked on the Criminal Code and the Corruption of Public Foreign Officials Act and, of course, it's not in those statutes. It's not a mandatory consequence." he said. The integrity regime review has been underway in Qualtrough's department since 2017. Newark said he's amazed that nobody with the company or the federal government seems to have realized that a conviction for SNC-Lavalin could lead to something other than a 10-year contracting ban. "Why didn't anybody say, 'Hey wait a minute. We know what about this. We're changing our policy,'" he said. The head of procurement at DND attempted to reassure members of the all-party House of Commons defence committee during a hearing last month that SNC-Lavalin's "secret" work for the federal government does not pose an unacceptable risk. "We hold the intellectual property, the drawings and everything," Pat Finn testified on Feb. 28. "Irrespective of the circumstances in which the contract is terminated, we hold the material." https://www.cbc.ca/news/politics/snc-lavalin-s-legal-woes-are-putting-a-500m-federal-defence-contract-at-risk-1.5073996

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  November 11, 2017 | Local, Aerospace

  Canadian air chief looks to speed up up fighter buy

  DUBAI — Canada will kick start its competition for a future fighter jet in 2019 with the hopes of awarding a contract by 2021, but the head of the Royal Canadian Air Force wants the process to move as quickly as possible. “The plan right now is to have a request for proposal out to industry by 2019. we're in discussions and have been in discussions with a number of the people who are considering competing for that, and what I'd like to see is that accelerated as much as possible,” said RCAF commander Lt. Gen. Michael Hood, in an exclusive interview with Defense News. “A 2019 RFP would get us into contract probably by 2021, and certainly my advice to government is the sooner the better.” The RCAF wants to procure 88 fighter jets to replace its current inventory of aging 76 F/A-18 Hornets, which are nearing the end of their lifespans. Canada is an international participant in the F-35 joint strike fighter program and has helped pay for the development of the aircraft. But Prime Minister Justin Trudeau vowed not to procure the F-35 during his campaign, and his government has opened up the competition to industry instead of moving forward with a sole-source acquisition. The Eurofighter Typhoon, Dassault Rafale, Boeing Super Hornet and Saab's Gripen E are all projected to compete for the opportunity. To bridge the gap between its Hornet fleet and a future fighter, the RCAF initially intended to procure 18 F/A-18 Super Hornets from Boeing — a move some analysts speculated could trigger a larger procurement later on. However, the Canadian government suspended the deal due to Boeing's legal complaint against Canadian aerospace company Bombardier over its commercial business. With a Super Hornet buy unlikely as long as Boeing and Bombardier feud, and Trudeau's promise not to buy the F-35, U.S. defense experts worry that Canada could be driven into the arms of a European fighter manufacturer, thus eroding Canada's long tradition of flying U.S. jets — a move that increases the militaries' interoperability. However, Hood stated that interoperability with the United States continues to be “the most important thing to me as command of the Royal Canadian Air Force.” “Every step less of interoperability is one step less of effectiveness, so interoperability is right at the top of the list beside operational advantage,” he said. “I want the young men and women that are going to be flying fighters into harm's way to have an operational advantage, and that will be key to me in the competition that's coming.” That need for interoperability with the U.S. Air Force does not diminish the chances of European fighters, he added. Canada continues to investigate alternative ways to acquire an interim fleet of F/A-18s, including potentially buying used Hornets from Australia. However, a potential deal for Super Hornets with Boeing is still on the table, Hood said. “I think the government has been presented with the FMS case for Boeing. And as they're looking at options, that's one option,” he said. “The Australian aircraft are another, and the government has not made a decision yet.” If the RCAF moves forward with a used Hornet buy from Australia, it will have to extend the lives of the airframes, which are meeting their structural ends, Hood noted. That business would likely go to L3 Technologies, which has done life extension work on the Canadian F/A-18s in the past. But Canada would still be able to acquire the aircraft “within the next couple of years” once a decision is made. Lockheed officials have said that if Canada ultimately decided not to procure the F-35, it could end its industrial partnership with Canadian firms — which totals 110 Canadian companies with $750 million in contracts, according to Lockheed — that already help manufacture the F-35. However, asked whether Canada was concerned about losing that business, Hood demurred. “I'm not privy to the industrial aspects of our partnership with Lockheed Martin,” he said. “What I can say is Lockheed Martin is a fantastic partner for Canada and for the Royal Canadian Air Force, has been for years. We remain very, very strongly engaged both in the joint project office and helping to continue with the development of the F-35, and Canadian companies continue to bid and win on contracts with that.” https://www.defensenews.com/digital-show-dailies/dubai-air-show/2017/11/11/canadian-air-chief-the-sooner-the-better-on-fighter-acquisition/

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  August 5, 2020 | Local, Naval

  Arctic military port first promised in 2007 sees new delay

  August 4, 2020 By Lee Berthiaume, The Canadian Press OTTAWA—The construction of a new military refuelling station in the Arctic is facing another delay more than 13 years after it was first promised by the federal government, with one analyst raising concerns about other pressing military needs in the region. Former prime minister Stephen Harper announced plans to build the Nanisivik deep-water port in Nunavut, along with up to eight armed Arctic patrol vessels, during a trip to the Far North in 2007. The port, considered one of the crown jewels of the Conservative government's Arctic strategy, was intended to provide fuel to the patrol ships and other federal vessels while expanding the military's permanent footprint in the North. The long-standing expectation was that the port located at the site of an old mining jetty on Baffin Island, about 20 kilometres from the community of Arctic Bay, would be ready by the time the first of those ships was delivered to the Royal Canadian Navy. Yet while the first Arctic patrol vessel was handed over to the navy on Friday after numerous delays and cost overruns, the Department of National Defence confirmed the Nanisivik facility won't be operational until at least 2022. Defence Department spokeswoman Jessica Lamirande said COVID-19 scuttled this year's construction season, which can only occur between June and September because of weather in the North. “Due to COVID-19 delays, a small number of contractors are expected to return to the site in August to start the 2020 work season,” Lamirande said in an email. “This means the season will be much shorter than planned and will only allow for a limited amount of work to be completed.” COVID-19 is only the most recent challenge to plague construction of the Nanisivik facility, which was originally supposed to be up and running in 2013 and include an airstrip and be manned throughout the year. The airstrip and year-round service were cut from the plans after the project's original $100-million budget was found to have more than doubled to $258 million in 2013. The current price tag is estimated at $146 million, according to Lamirande. The federal government has also faced environmental hurdles due to the need to clean up the old fuel-tank farm located on the site, which was home to a port used to ship ore from an old zinc mine. There were also structural issues with the existing jetty. Lamirande said significant progress has been made on the facility since the first full construction season in 2015, with nearly all fuelling infrastructure in place. But the fact the port still hasn't been finished, despite the scope of the project having been dramatically scaled back, is both disheartening and troubling, said defence analyst David Perry of the Canadian Global Affairs Institute. Canada's relative difficulty building a single port with limited facilities in the North contrasts sharply with Russia's massive Arctic expansion in recent years, Perry said, and bodes poorly for needed Canadian military investments in the region. Those include upgrading the string of increasingly obsolete radars that forms the backbone of North America's system for incoming missiles and air- and water-based threats, as well as several airstrips in the area that will be used by Canada's new fighter jets. Those projects are expected to start in the coming years. “It's kind of dispiriting how long it has taken us to develop relatively simple infrastructure at one of the most accessible parts of our Arctic,” Perry said of Nanisivik. “The length of time it has taken us to build doesn't leave a lot of confidence that the other projects are going to move in a relatively quick timeframe.” https://www.on-sitemag.com/construction/arctic-military-port-first-promised-in-2007-sees-new-delay/1003969425/